The Agribusiness World Today

Ken Scwedel
Investigador de Agronegocios de Rabobank, México
13 - 17 de Enero de 2008

The World

After hours eating: Well it is not really after hours, and much less illegal. Rather, fast food outlets have come to realize that consumers want to eat at all hours of the day, and not just at “traditional” meal times. Likewise, they realize that, in general terms, the more hours that their outlets are open, the more food they are able to sell. As a result we are seeing fast food outlets staying open later into the night. In the U.S., for example, food purchased between 9 pm and midnight now accounts 7 percent of total sales.

Interestingly, as far as consumers are concerned, according to research in that country U.S., some “45 percent of late – night consumer dubbed their purchases as supper, while 51 percent called it a snack”. Whatever the case, it is younger consumers who are “most likely to visit during that period”. This means that by staying open, not only are they able to sell more, but they are able to create a degree of loyalty among a segment of consumer more likely to patronize fast food outlets. While a lot of research has focused on the U.S. it seems that the real fast food fanatics, according to a study by Synovate, a market research firm, are in the UK. What we are seeing, therefore, are not only changing preferences but also changing patterns of food consumption in different world markets.

Shifting the market from private labels to brands in the UK: Typically, product markets move from brands to private labels. Now in the UK, Arla is betting on developing a market for branded organic spreads. While they see organics growing in demand and they note that spending on organic spreads has grown annually be 16 percent, “organic butters, margarine and spreads currently account for just 1.4 per cent of total UK spending in the segment”. Interesting, most of the sales are by private labels. Arla’s idea is to launch their organic spread as a line extension of their Lurpak product range -- “currently the nation’s best selling butter, spreads and margarine brand”. Because, they say, consumers want organics from “a brand they can trust”, Arla feels that they can take ownership of the category. Although brand extensions are generally risky, we do see this as having a good chance for success: Arla has developed a strong position for the brand while already having accustomed consumers to extending the brand.

Mexico

Tapping the market for long term debt. We have seen that the government has been systematically looking to extend the debt profile further into the future. Now, just into the New Year the government has taken another step forward in this strategy. They have just placed placed a US$1.5 billion bond with a 6.055 yield, which will mature in 2040. In other words, a 32 year maturity: the longest yet for government debt. Not only was the market willing to buy long term debt, but the issue was oversubscribed. What seems to be happening is that the market appears to be rather upbeat regarding Mexico. The country’s foreign debt has fallen from 8.4 percent of GDP in 2000 to 4.4 percent of GDP at the end of last year.